Fiat to demerge auto, truck units, invest 30 billion euros Eda: Updates with details of Fiat's five year plan (Roundup)

Apr 21, 2010, 18:10 GMT

Turin, Italy - Italian car giant Fiat unveiled Wednesday details of a five year strategic plan, including the by-year-end separation of its auto business from its construction and truck business.

Fiat chief executive officer Sergio Marchionne outlined details of the 2010-14 strategy during a six-hour investors' conference at the Turin-based company's headquarters.

Earlier Fiat had issued its first quarter results showing that its net loss had narrowed to 21 million euros (28 million dollars) from 411 million euros in the same period last year.

But during his presentation, Marchionne warned that car sales in Fiat's home market Italy could drop by as much as 30 percent without the state incentives that were available in 2009.

Marchionne said Fiat intended to invest some 26 billion euros in Italy by 2014 with an additional 4 billion for research and development.

'The level of investments destined for Italy is enormous, and amounts to two thirds of all those of the Fiat Group at world level,' Marchionne said.

Labour unions and Italian government ministers have in recent months expressed concern over Fiat's commitment to Italy, especially in the wake of the company's acquisition of a controlling stake in troubled US car maker Chrysler.

Over the next five years Fiat also intends to launch 34 new car models in Europe and undertake a re-styling operation with 17 others, Marchionne said.

Of these two-thirds would be manufactured by Fiat and the remainder by Chrysler, he added.

By 2014 Fiat and Chrysler would aim to sell 6 million cars in Italy, Marchionne said.

Other results released by the company showed that Fiat's first quarter revenues rose 15 per cent to 12.9 billion euros.

Fiat reported trading profit - operating profit excluding one-time items - of 352 million euros compared with a loss of 48 million euros in the first quarter of 2009.

Fiat also confirmed its 2010 targets for trading profit and net debt.

On Tuesday, in a surprise announcement Fiat said that John Elkann will become its new chairman.

On Wednesday Elkann received a standing ovation when he was presented to investors.

The 34-year-old American-born grandson of historic company leader Gianni Agnelli, Elkann succeeds Luca Cordero di Montezemolo, 62, who has spent six years at the helm.

Montezemolo, who remains the president of Ferrari and a member of the Fiat executive board, said he has fulfilled all the tasks that Fiat stockholders had initially given him.

Agnelli had chosen Elkann as his successor before his death in 2003. Elkann has served as Fiat vice president and president of the family holding company Exor SpA, which controls 30 per cent of the Fiat Group and is active mainly in real-estate and financial sectors.

His rise to Fiat Group chairman was well received by the markets with Fiat shares surging on news of the appointment.